Gensler Delivers Remarks on Securities Law Enforcement

At the 2023 Securities Enforcement Forum, Securities and Exchange Commission (SEC) Chair Gary Gensler delivered remarks on the importance of attorneys, accountants, and compliance professionals serving as “good stewards” of the securities laws. He emphasized the Commission’s Enforcement Division focuses on five themes “Economic Realities, Accountability, High-Impact Cases, Process, and Positions of Trust.”

Touching on the first theme “Economic Realities” Chair Gensler stated, “to effectuate Congress’s purpose, we don’t enforce the securities laws based on a product’s label. Rather, we look to the underlying economic realities.” He added the Division of Enforcement has been focused on the crypto markets due to the rampant fraud, scams, and other legal violations within the sector. He noted that many crypto assets fall under the definition of a security; and therefore, the intermediaries dealing in those assets have obligations and are also subject to securities laws. On “Accountability” Gensler stated the Commission uses “all of the tools in our toolkit to hold bad actors accountable.” This includes monetary remedies, barring individuals from certain practices, and charging individuals not just firms. He also added the Commission is focused on “High-Impact Cases” that can “help change behavior and bring greater compliance with the law.” As an example, he noted the Commission’s recent actions against certain firms for their recordkeeping failures involving employees using off-channel communications. Chair Gensler touched on the importance of “Process” noting the Division of Enforcement is focused on fairness, timeliness, and meaningful cooperation. He stated “[a]cross numerous actions last fiscal year, the Commission ordered zero or reduced penalties based on the respondents’ cooperation.” Last, he focused on the “gatekeepers” that hold “Positions of Trust” in the financial services industry. Chair Gensler commented “[w]hen we hold accountable those in positions of trust, that builds trust in the markets.”

Click here to read Chair Gensler’s prepared remarks “Partners of Honest Business and Prosecutors of Dishonesty.”